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Not since the “U.S. Steel Hour” during television’s golden age has the Pittsburgh-based steelmaker had a drama like the company’s current public relations feud with former bidder Cleveland-Cliffs for its proposed takeover by Japan’s Nippon Steel Corporation.
In a May 21 press release, Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves told the US Steel board, “With a facility represented by United Steelworks, you have no right to sell to whoever you want… My opinion remains the same: you cannot and will not close your announced deal with Nippon Steel.
That same day, US Steel said in its own press release: “NSC’s investment has been under attack from day one by one of our competitors and unsuccessful bidder, Cleveland-Cliff, who has been planting misinformation in our groups of interest in an unrelenting manner and unbridled effort to derail the transaction.”
The $14.1 billion acquisition deal, announced in Tokyo and Pittsburgh in December, still requires regulatory approval and is expected to close later this year.
Several contractors were reached for comment on what the deal could mean for structural steel and other related products, but all declined to comment, with most saying they use Cleveland-Cliffs and US Steel as suppliers and who want to remain neutral in the public discussion. . Cleveland-Cliffs and US Steel rank second and third, behind Nucor Corp., in steel produced by domestic manufacturers, with 17.27 and 15.75 million tons produced in 2023, according to the World Steel Association. Nippon Steel ranks fourth in the world, ahead of Nucor, with 43.66 mt produced last year. Combining its operations with US Steel would create a much larger company with access to the US market than Japanese steel had ever enjoyed before.
What does this mean for construction?
Associated General Contractors of America believes that this acquisition and its overall effect are still unknown. “I don’t think there’s clear evidence one way or the other of how the deal would affect steel prices,” says Ken Simonson, chief economist at AGC. “If Nippon Steel invests more in modernization than Cliffs or an independent US steel would have done, that would be positive for steel buyers, but if they close capacity in certain types of steel, and imports are not allowed or available to make up the difference: prices and perhaps delivery times would be expected to increase.”
Associated Builders and Contractors of America supports the agreement. “This potential deal would benefit both organizations and may increase steel production capacity in America or at least the supply of steel to the domestic market,” says Anirban Basu, ABC’s chief economist. “Contractors and steel buyers should not fear this deal,” Basu added, saying the deal “may be necessary for US Steel to survive and recapitalize some of its assets.”
As the electricity goes, so go the projects
While much of US Steel’s production capacity comes from older blast furnaces in southwestern Pennsylvania and Gary, Ind., its most modern plant is Big River Steel in Osceola, Ark., a “mill flexible” LEED-certified acquired in 2020 by US Steel, which provides products and services to the automotive, energy, construction and agriculture industries. It also produces non-grain oriented electrical steel on a new line added in 2023. NOES is used in the construction of transformers for data centers, solar farms and other heavy electrical projects. Cleveland-Cliffs is a competing producer of electrical steel.
“Nippon makes the best electrical steel in the world,” says Lisa Reisman, CEO of metals price analysis source MetalMiner.com. “It’s great that the United States of America is bringing some of that knowledge to the West and maybe taking advantage of it at Big River Steel.”
On April 17, President Biden, speaking to the United Steelworkers, vowed to block the Nippon Steel-US Steel deal. Former President Trump, in February, also said he would block the deal. However, Japan remains the largest foreign investor in the US, and both should weigh the impact on other foreign deals that a block like this could create.
